More services professionals to be in taxman’s net soon
18 Jul 2011
1
The union finance ministry intends to bring more professionals in the services sector under the tax net, joint secretary in the ministry V K Garg said on Sunday.
Speaking at a service tax-related seminar organised by the Associated Chambers of Commerce and Industry of India (Assocham) in Mumbai, Garg said, "More areas in the services sector need to be brought under service tax.''
He added, ''In India this is tougher to do, because goods are sometimes classified as services and vice versa.''
Clearly, his ministry is not likely to delay for long the move to widen the tax net on professionals. "Very soon, there will be an announcement by the union finance minister (Pranab Mukherjee) on a negative list of taxation. We have drawn up a negative list of taxation about what we do not and should not tax. Once we are sure of this, everything else which is not included in this list can be brought under the tax net," Garg said.
He said that taxation is important for any country and if taxation fails, it leads to deficits and inflation, which is the worst kind of taxation.
He also said that if taxes are improper, economic activity gets distorted. Similarly, if import duties are high, then local businessmen will enjoy protection and a monopoly, which will result in consumers suffering, he said.
"In India, even defining certain economic activities as a service is not easy, because the constitution does not recognise several such activities as service. So, there is a challenge even at the definition level," Garg said. "Currently, only a limited number of services are under the tax net.''
Relying heavily on the implementation of the proposed general goods and services tax (GST), which is aimed at simplifying and rationalising the indirect tax structure across the country, Garg said the centre has shown commitment to implement the GST. The government proposes to tax most of the services under the GST regime.
''A constitution amendment bill is pending in Parliament, which seeks to pave the way for introduction of GST. The idea is to implement the GST regime by the year 2013," he said.
Speaking at a service tax-related seminar organised by the Associated Chambers of Commerce and Industry of India (Assocham) in Mumbai, Garg said, "More areas in the services sector need to be brought under service tax.''
He added, ''In India this is tougher to do, because goods are sometimes classified as services and vice versa.''
Clearly, his ministry is not likely to delay for long the move to widen the tax net on professionals. "Very soon, there will be an announcement by the union finance minister (Pranab Mukherjee) on a negative list of taxation. We have drawn up a negative list of taxation about what we do not and should not tax. Once we are sure of this, everything else which is not included in this list can be brought under the tax net," Garg said.
He said that taxation is important for any country and if taxation fails, it leads to deficits and inflation, which is the worst kind of taxation.
He also said that if taxes are improper, economic activity gets distorted. Similarly, if import duties are high, then local businessmen will enjoy protection and a monopoly, which will result in consumers suffering, he said.
"In India, even defining certain economic activities as a service is not easy, because the constitution does not recognise several such activities as service. So, there is a challenge even at the definition level," Garg said. "Currently, only a limited number of services are under the tax net.''
Relying heavily on the implementation of the proposed general goods and services tax (GST), which is aimed at simplifying and rationalising the indirect tax structure across the country, Garg said the centre has shown commitment to implement the GST. The government proposes to tax most of the services under the GST regime.
''A constitution amendment bill is pending in Parliament, which seeks to pave the way for introduction of GST. The idea is to implement the GST regime by the year 2013," he said.
